Have you a Will that adequately covers your family?
Is there provision to allow the continuation of your business?
Does your will cover that company you own? Or that family trust you operate?
Will the proceeds of your superannuation be a part of your estate?
Or have you made a binding nomination under the Super Fund?
Are you aware that superannuation does not automatically form part of a deceased's estate
and a consequence could be that not all your children will be equally be provided for.
Are you concerned there could be a challenge to your Will?
If so, how do you protect the wishes that you stated in your Will?
Do you need a testamentary trust?
A Will is a legal document we all need advice on at some stage and there are many issues that you can easily overlook in your Will. Do not take the risk and not have a Will. Call us to discuss.
Death Benefits from Superannuation Funds
Death benefits from superannuation funds do not by law form part of the deceased member's estate. They are not automatically distributed according to the deceased person's will. Usually it is up to the trustee of the fund to determine to whom the benefit should be paid. Generally, death benefits can only be paid from a superannuation fund to dependants and/or the legal personal representative of the deceased member. Only if the trustee, after making reasonable enquires, has not found either a legal personal representative or a dependant of the deceased, can payment be made to another person.
Trustee discretion and non-binding Nominations
Most superannuation fund trust deeds give the trustee a discretion with respect to distribution of death benefits. Often the trustee will provide a nomination form to members, to allow them to nominate their preferred beneficiaries. Although the trustee will take such a valid nomination into account when exercising its discretion, it will not be bound to follow it. Such nominations are called non-binding nominations.
This contrasts with the situation where a trust deed provides for binding nominations. As the name suggests, such nominations are binding on the trustee, provided that they are valid (for instance, they are updated every three years and only nominate dependants).
While binding nominations provide certainty, they can produce results that are unfair or undesirable from the deceased's point of view - particularly if they are not up to date (eg a deceased separates, has a child, marries or the nominated dependant is bankrupt). For these reasons, binding nominations have not been as popular as it was anticipated they would be when they were introduced.
Most superannuation funds still give the trustee the discretion with respect to distribution of death benefits, rather than adopting binding nominations.
Death benefits do not automatically form part of the estate. Is a provision in a will about distribution of superannuation therefore ignored?
A member's wishes are relevant but not determinative to a trustee when deciding how to carve up a superannuation death benefit.
The Member's Will can be a helpful guide as to their wishes regarding the distribution of their assets. This is particularly likely if it is clear that the Member has given detailed consideration to their affairs as a whole, and prepared a Will that seeks to dispose of superannuation death benefits in a particular way.
Is it necessary to obtain Probate or Letters of Administration if there are no assets in the estate and the trustee wants to pay the superannuation proceeds to the legal personal representative?
Most Trustees deal with the person nominated as executor under the Will even before Probate has been granted. However, save in the case of very small benefits, the executor will need to obtain a grant of probate before a payment will be made.
Is the trustee of the super fund affected by a testators family maintenance claim (ie. a challenge to the estate) claim against the estate?
As superannuation does not form part of a Member's estate, those claiming under the testator's family maintenance provisions in the various jurisdictions cannot generally include superannuation benefits in such a claim. It may however be relevant for the Trustee to be made aware of potential claims against a Member's estate if the Claimant is seeking a distribution of the superannuation death benefit in their favour and is arguing against a distribution to the estate.
Under the Admimistration and Probate Act, in Section 91, it provides that a Willmaker must make provision for the proper maintenance and support for any person for whom the deceased had a responsibility to make provision. The right to make a claim arises when the deceased by his Will fails to make adequate and proper provision in the light of the deceased's circumstances and moral responsibilities a to a claimant. The claimant must be within the class of persons to whom the deceased had a legal obligation to provide for and must show a need for the provision, combined with a moral claim to have that need addressed by the deceased.